Rawlins Daily Times

December 10, 1996

Uranium miners buy out partners

Staff and wire reports

U.S. Energy Corp. and Crested Corp. said Monday they intend to buy their partner's 50 percent stake in the Green Mountain Mining Venture.

The venture was formed by the two companies and Kennecott Energy and Coal Co. in 1990 to explore for and possibly develop uranium deposits below Green Mountain near Jeffrey City.

The project would reopen the Sweetwater Uranium Mill northwest of Rawlins, formerly operated by Unocal. If the mine goes into production, it is expected a significant portion of the mill's employees would bc based in Rawlins.

The proposal by U.S. Energy and Crested, a 52 percent owned subsidiary of U.S. Energy, will make the companies whole owners of the venture. The transaction would involve either $15 million in cash or $30 million in stock.

Kennecott has spent about $17 million so far on the project to maintain the uranium mine and mill properties.

The transaction is expected to be concluded before the end of the year, when U.S. Energy-Crested will take over full management of the mine and mill complex.

Production from the mine is expected to begin next year, U.S. Energy President, John Larsen said.

"Since our companies' sole focus will bc the production, milling and marketing of uranium, this understanding with Kennecott will allow us to accelerate the speed at which the Sweetwater Mill and Jackpot Mine come info full production and will free up Kennecott to devote more time to its core business," he said.

He said production is being timed lo coincide with an expected rise in uranium prices. He said current worldwide demand calls for about 150 million pounds annually, while current production is about 80 million pounds.

He said new mines and projects including converting weapons grade uranium lo material suitable for commercial reactors will bring supply to about 125 million pounds annually.

"(The Green Mountain uranium deposits) have the geologic potential to become the largest in the world," Larsen said. "This part of a mining district, when fully developed, will contain several uranium mines."

U.S. Energy has large interests in other uranium mines in the area controlled by Sheep Mountain Partners.